NEECHEI GEAR PIVOTING IN AN ABORIGINAL START Case Study Solution

NEECHEI GEAR: PIVOTING IN AN ABORIGINAL START-UP

Kendal Netmaker, who belongs to the first nation aboriginal community of Canada is the sole owner and the CEO of Neechei gear brand. Kendal Netmaker is also a motivation speaker in his community. He had started his business in 2012 after completing his postsecondary education by opening a retail outlet at Saskatoon shopping mall. His brand strategy was to target a specific target market which was the first nation aboriginal peoples living in Canada. As a sporting athlete Kendal Netmaker was urged to enter in the lifestyle brand industry which focused on targeting his community. The particular idea of the brand was to promote and socialize his aboriginal community which would help his community to overcome socialization enhancement with mainstream people of Canada. After establishment of his business in 2012 he faced some tough grounds to maintain and increase his revenues.

PROBLEMS FACED BY KENDAL NETMAKER:

After the establishment of his brand and retail outlet, Kendal, the Neechei Gear sole owner was faced with the problems of cost management, marketing management, supply chain management and outlets management. Soon after opening his first retail outlet Saskatoon shopping mall Netmaker opened his second outlet which was located one and a half hour drive from his first outlet which further increased his problem of time and store management. As managing all the operation of Neechei Gear solely with only two to three part time retail stores staff and managing both the stores solely restricted him to focus more on marketing activities of his brand and brand management tactics. The high cost of hiring sales manager or outlet manager was also one of the major factors of handling all the activities by himself. Due to cost management and less focus on brand marketing strategy he closed his second store which was located at Prince Albert, Saskatchewan, Canada.

To get rid of these problems in early 2014 Kendal Netmaker shifted his business model to a wholesale model and started to sell Neechei Gear product in bulk quantities. The problem he recognized in this model was less brand recognition amongst mainstream population because of the lack of marketing and brand management strategies. After a tough time in applying this model and outsourcing plain ready garments from producers because of low cost, Kendal Netmaker received one bulk quantity order from his aboriginal community which saved him from the occurrence of huge loss in 2014.

OPPORTUNITIES:

Kendal Netmaker noticed several opportunities which will help him to attract the target market which was the aboriginal peoples from the first nation. The aboriginal peoples had shortage of lifestyle brands with less association and expression with their community. He realized the need for positive lifestyle brands to empower the Aboriginal’s growth. This urged Kendal Netmaker to remain in the market with different application of his business models. His brand also expresses and communicates greater social purpose and cultural impacts which provides him an opportunity to attract more people from the particular market segment he targeted. The growing population of Aboriginal community and less participation in sporting activities due to their socioeconomic circumstances, these opportunities will help Kendal Netmaker to empower and express Aboriginal youth to mainstream population of Canada. The real opportunity is because his brand inherits cultural as well as social impact.

SITUATIONAL ANALYSIS:

Neechei Gear was affected by several internal and external effect of the company. These affects are discussed as below.

INTERNAL COMPANY ANALYSIS:

RETAIL BUSINESS MODEL:

Neechei gear a lifestyle and community representing brand managed by Kendal Netmaker was going through several problem including low cost budget, brand marketing and less management. The sole owner of the company Kendal Netmaker was managing all the operation of the company only with the help of two to three part time employees. This management overload by Kendal Netmaker was the reason that he was not able to develop or work on marketing strategy and tactics for the problem. Due to this less focused strategy, Neechei managed to put good net profit for the year 2013 but not good enough to hire a sales manager or retail manager who could manage these stores with increasing sales. This situation led him to close his second outlet at Prince Albert, Saskatchewan and to look for better revenue opportunities by transferring his retail model to wholesale model.

WHOLESALE BUSINESS MODEL:

In the early 2014, Kendal Netmaker applied the wholesale market model to Neechei Gear. Through this market model he focused more on the quantity of the product rather than the price of the product which was the core requirement for wholesale market model. Kendal recognized the need for marketing and distribution to get the clients for large quantity buyers. He attended trade shows to secure orders which were usually placed 6 months prior. These used to book the orders from established, niche and new apparel lines. Buyers were not attracted by Neechei Gear and thus Kendal was unable to attract large order from clients. Somehow by the end of the year received an order from Aboriginal community member which saved him from large loss by the end of 2014.

RECOMMENDATION:

The decreased trend in revenue for which Kendal shifted his business model from retail model to wholesale model further decreased the revenue and saved the company from loss. The cost consideration was a factor because of which Kendal was unable to hire retail managers to look after for the operations of the company. He should look for a business partner with same interest and enthusiasm so that the work can be divided.

To find a business partner Kendal has to put great deal of trust in him which is a factor which can restrict him from this decision. Although this decision can be fruitful because marketing and brand strategies will be focused more on activities like opening popup stores for brand promotion and marketing their product in crowded places. To manage cost and to increase revenue Kendal Netmaker should try to find business partner to boost the business.

EXTERNAL ANALYSIS OF THE COMPANY:

The external analysis of the company is based on Porter’s five forces model which are discussed below:

THREATS OF NEW ENTRANT:

The threats of new entrants are quite high for this industry. The low cost nature of starting a business in this sector of industry with high market segmentation opportunities makes the possibility of the new entrants quite high.

THREATS OF SUBSTITUTE:

Threats of substitute is also high. The market for apparel industry is highly fragmented with many low cost brands. The differentiation of the product in regards to changing fashion in lifestyle is to be adopted when change in fashion occurs, to remain competitive and differentiated from the rivals.

BARGAINING POWER OF THE BUYER:

The bargaining power of the buyer is also quite high for the apparel industry. Many established brands and apparel industry market the brand targeting mainstream as well as specific segment increases the options for the buyer.

BARGAINING POWER OF THE SUPPLIER:

The bargaining power of the supplier is quite low in this industry. The availability of producers and suppliers with drop ship supply chain management procedures of low cost increase the options for wholesalers and retailer to choose from different buyers around the world.

RIVALRY AMONG COMPETITORS:

Rivalry amongst the competitors is also quite high because of similarity of product and ongoing fashion. The product is only differentiated on the basis or brand name and quality. To maintain the position in competition usually by trying to remain ahead of its competitors makes high rivalry amongst the company and its competitors.

OPTIONS ANALYSIS:

1FOCUS ON BUSINESS ACTIVITIES:

Focus on business activity will enable Kendal Netmaker to market management tactics, brand management tactics and segment focused strategies. Although he has to get rid of activities such as motivational speaking and event sales. This is how he would be able to find retail companies focused on Aboriginal customer and cater his product need for Aboriginal market segment. Later Kendal should turn his focus to mainstream market segment from community market segment to increase the product demand. Although focusing on this option, Kendal will have to forgo promotion of his brand in his community by not being motivational speaker and staying away from community engagement.

2.FIND BUSINESS PARTNER AND PROMOTE BRAND:

Kendal can adopt an option of setting a network of popup shop across Canada. Pop up shop is an activity for marketing and brand promotion. Due to managing all the operations solely Kendal was unable to perform these activities which made his brand less recognized in the market. This strategy could be focused if Kendal finds a business partner and hires people to perform activities such as opening and managing pop up shop efficiently by managing revenue streams with flow of product and promotion.

3.HIRING EXPERIENCED SALES MANAGER:

This option is directly related to the cost of increasing business. Kendal has to find Aboriginal partner for this job which is quite difficult because very less people from Aboriginal community have business degrees, training or sufficient experience. Those who possess these skills and education are hired as government official because of their rarity as Aboriginals. If Kendal finds out a person for sales management he can increase the sales level which will justify the 40 to 50 thousand annual salary. This option will also allow him to focus on motivational speaking and engagement with community to promote and market his brand.

DECISION CRITERIA:

2- Does meet criteria     1- Close to criteria         0- Does not meet criteria

FACTORS OPTION 1 OPTION 2 OPTION 3
SALES 2 2 2
COST 2 2 0
PROMOTION ACTIVITY 1 2 1
TOTAL SCORE 5 6 3

According to decision criteria and analysis the company should implement option 2 with highest score because of its attractiveness in increasing revenues, managing costs and promotional activities. Selection of option 2 will enhance the capability of Kendal Network to promote business and increase revenues…………

 

This is just a sample partical work. Please place the order on the website to get your own originally done case solution.

Share This